Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Right of First Refusal (ROFR) - The legal nature of ROFR is generally considered a personal covenant, not creating an interest in property or a proprietary right. It obligates the holder to offer or accept a deal before others, but does not grant ownership or control over the property itself. ["Arshiya Limited vs Ascendas Panvel FTWZ Ltd. - National Company Law Tribunal"] ["IND_KAR00000151583"]
Applicability to Elected Bodies with Non-Profit Motive - When an elected body or organization operates with a non-profit motive, its functions are often regarded as discharging public or social functions rather than commercial interests. Such bodies are typically recognized as non-profit entities under applicable statutes (e.g., Societies Registration Act), and their decisions or rights are governed by statutory provisions rather than profit motives. ["CHAYAN GHOSH CHOWDHURY vs Punjab & Sind Bank - Central Information Commission"] ["IND_KAR00000151583"]
Right of First Refusal in Non-Profit Elected Bodies - In the context of non-profit organizations or bodies serving public or social purposes, the right of first refusal does not generally confer a proprietary interest or interest in property but remains a personal covenant or contractual right. Since these bodies are motivated by public or non-profit objectives, their rights are more aligned with statutory and organizational rules rather than commercial profit motives. ["CHAYAN GHOSH CHOWDHURY vs Punjab & Sind Bank - Central Information Commission"]
Main Points and Insights:
The applicability of ROFR to a non-profit, publicly motivated elected body depends on whether the right is viewed as a contractual covenant rather than a proprietary interest, which is generally the case ["CHAYAN GHOSH CHOWDHURY vs Punjab & Sind Bank - Central Information Commission"].
Analysis and Conclusion:
In the world of contracts, a right of first refusal (ROFR) is a powerful tool. It gives one party the first chance to match any offer made on an asset or opportunity before it's offered to others. But what happens when the party in question is an elected body serving a non-profit motive? Can such a group enforce or benefit from ROFR in their agreements?
This question often arises in contexts like charitable organizations, cooperatives, or public utility boards where elected members manage non-profit activities. While ROFR is fundamentally contractual, its applicability hinges on the body's nature—public or private, profit-driven or charitable. This post breaks down the legal nuances, drawing from key judicial insights. Note: This is general information, not specific legal advice. Consult a qualified attorney for your situation.
ROFR is a contractual provision granting priority to match competing offers. It's common in real estate, business sales, and partnerships. However, enforceability depends on the parties involved. For elected bodies in non-profits, courts examine:- The predominant object of the entity (charitable vs. commercial).- Whether functions are public or private.- Contractual terms and any statutory restrictions.
Generally, ROFR applies unless excluded by contract or law. But non-profit status doesn't automatically bar it—especially if activities lack profit motive. Assistant Commissioner of Income Tax (Exemptions) VS Ahmedabad Urban Development Authority - 2022 0 Supreme(SC) 1088
The key query is: Is the right of first refusal in a contract applicable to an elected body who serves on non-profit motive?
ROFR is a contractual right, applicable based on the body's functions. An elected body operating in a purely non-profit, charitable, or public utility capacity—without profit-driven activities—typically isn't restricted like commercial entities. Courts distinguish such bodies from profit-motivated ones using the predominant object test: if the main purpose is charitable and profits (if any) are incidental and reinvested, ROFR can apply per contract terms. Additional Commissioner of Income-tax, Gujarat, Ahmedabad VS Surat Art Silk Cloth Manufactures'''' Association, Surat - 1979 0 Supreme(SC) 489Assistant Commissioner of Income Tax (Exemptions) VS Ahmedabad Urban Development Authority - 2022 0 Supreme(SC) 1088
As noted in Surat Art Silk case: an organization would not lose its charitable character merely because it earns some profit, provided the predominant object is to serve the charitable purpose. Assistant Commissioner of Income Tax (Exemptions) VS Ahmedabad Urban Development Authority - 2022 0 Supreme(SC) 1088
The crux is classification. Functions tied to sovereign or governmental roles may be public, subjecting the body to stricter rules. However, voluntary, charitable activities independent of state control are private/non-public. In Ramakrishna Mission case, such non-profit operations weren't deemed public functions. RAMAKRISHNA MISSION VS KAGO KUNYA - 2019 0 Supreme(SC) 363
For elected non-profit bodies (e.g., society committees or co-op boards), if genuinely charitable, ROFR governs by contract, not profit motive alone. Commissioner Of Income Tax - Exemption VS Association of Third Party Administrators - 2020 0 Supreme(Del) 938
Entities serving public utility or charitable purposes differ from commercial ones. Incidental profits don't trigger restrictions if reinvested charitably. Additional Commissioner of Income-tax, Gujarat, Ahmedabad VS Surat Art Silk Cloth Manufactures'''' Association, Surat - 1979 0 Supreme(SC) 489 This supports ROFR applicability in non-profits.
Many cases involve elected members in societies or co-ops. For instance, under Societies Registration Act, councils are non-profit and governed by their memorandum—electoral rights are statutory, not fundamental. ROMESH LAL KHAJURIA vs SANJEEV DHIR AND ANR
In Kerala Cooperative Societies Act, Section 28(8) limits rights to attend meetings and elections but doesn't broadly restrict contracts. Votes from administered societies count, showing elected reps retain roles without profit disqualification. Administrative Committee VS Gopalakrishna Pillai, S/o Thankappan Pillai - 2023 Supreme(Ker) 914
Even clubs selling to members qualify as dealers if trade-like, regardless of profit motive: the question of any profit-motive or accrual of any profit is not relevant. AUTOMOBILE ASSOCIATION OF EASTERN INDIA VS STATE OF WEST BENGAL - 1990 Supreme(Cal) 255 This underscores that non-profits can engage in contracts like ROFR without inherent bars.
Educational institutions selling prospectuses aren't business if incidental to mission and non-profit. KARNATAKA STATE OPEN UNIVERSITY vs THE STATE OF KARNATAKA - 2025 Supreme(Online)(Kar) 24810
Elected bodies often face office of profit scrutiny under Representation of the People Act. Section 7(d) disqualifies those with government contracts for goods/works—but excludes non-commercial setups. Bus permits or mail contracts weren't disqualifying if not profit-driven or benami. Yugal Kishore Sinha VS Nagendra Prasad Yadav - 1964 Supreme(Pat) 26
Deep state control defines office of profit; mere aid doesn't. Non-profits affiliated to universities retain independence. Sab Singh Mehra VS State of Uttarakhand - 2012 Supreme(UK) 373
Statutory transfers of contracts (e.g., to corporations) end subsisting government ties, avoiding disqualifications. This parallels ROFR: once classified non-commercial, contractual rights persist. Shrikant VS Vasantrao - 2006 1 Supreme 344
Rights to elect/be elected are statutory, not fundamental—subject to amendments, as in co-op rules limiting delegates to chairmen. Sanjay Singh Rana VS State of Uttarakhand - 2024 Supreme(UK) 420Mangilal Patidar VS State of M. P. - 1994 Supreme(MP) 384
ROFR may not apply if:- Activities are predominantly profit-driven or commercial. Assistant Commissioner of Income Tax (Exemptions) VS Ahmedabad Urban Development Authority - 2022 0 Supreme(SC) 1088- Explicit contract exclusions exist. Additional Commissioner of Income-tax, Gujarat, Ahmedabad VS Surat Art Silk Cloth Manufactures'''' Association, Surat - 1979 0 Supreme(SC) 489- Body is a public authority with sovereign functions. Commissioner Of Income Tax - Exemption VS Association of Third Party Administrators - 2020 0 Supreme(Del) 938
In tenders, ROFR-like preferences (e.g., Swiss Challenge) must ensure fairness; arbitrary use violates Article 14. Shree Ostwal Builders Ltd. VS State of Maharashtra - 2008 Supreme(Bom) 457
Negative covenants in personal service contracts may be void. PERCEPT TALENT MANAGEMENT PVT. LTD. VS YUVRAJ SINGH - 2007 Supreme(Bom) 1682
No-confidence motions can remove elected heads in wakf committees, showing elected roles aren't absolute. Qayyum T Patayat @ Patait VS Chief Executive Officer Karnataka State Board Of Auqaf, Benglauru - 2020 Supreme(Kar) 801
Generally, ROFR applies to elected bodies in genuine non-profit settings if contractually provided and activities align with charitable/public utility goals. Profit motive isn't disqualifying; focus on predominant object and functions. Cases affirm non-profits' contractual capacity, distinguishing them from commercial entities.
Key Takeaways:- ROFR is contractual—non-profit status supports, doesn't bar it. Assistant Commissioner of Income Tax (Exemptions) VS Ahmedabad Urban Development Authority - 2022 0 Supreme(SC) 1088- Use predominant object test for classification. Additional Commissioner of Income-tax, Gujarat, Ahmedabad VS Surat Art Silk Cloth Manufactures'''' Association, Surat - 1979 0 Supreme(SC) 489- Elected non-profits retain rights unless statutorily restricted.- Always review specific contracts and consult experts.
Stay informed on evolving laws—non-profit governance blends contracts, elections, and public interest seamlessly.
#RightOfFirstRefusal, #NonProfitLaw, #ContractLaw
In the present case bus permit has been issued by the Transport Authority which is a statutory body consisting of both official and non-official members appointed under the Motor Vehicles Act. ... Learned counsel far the respondent, on the other hand, contended that under the easting provision, which is applicable to the present case, no disqualification was incurred. ... ... Before that this section read thus:- ... (d) if, whether by himself or by any person or body of person in trust for him or for his benefit or on ....
Aggrieved with the non-receipt of any reply from the CPIO, the Complainant filed a First Appeal on 27.03.2023 FAA’s order, if any, is not available on record.” 3. ... Not every such person or body is expressely define as a public authority or body, and the meaning of a public authority or body may vary according to the statutory context one of the distinguishing features of an authority not being a public authority, is profit making. ... of the public and not for private #HL_ST....
The Council being a non-profit organization under the Societies Registration Act, 1860 is governed by the Memorandum and Articles of Association, which is even duly the legally constituted body under the Societies Registration Act, 1860, ... the candidate and not by casting vote of the Chairman/ Acting Chairman and in case of a tie, lots shall be drawn and whichever candidate wins the lot would be declared as elected, and further that on account misjoinder and non-joinder of ... Under the ....
On a close scrutiny of the provisions as detailed above and the decisions on the point, we are of the opinion that a plain reading of the provision inclusive of its non obstante clause deals only with the right to attend the general body meeting and to be elected as a member of the committee of the Regional ... We are of the opinion that Section 28(8) specifically refers only to general body meetings and the right of being elected as Members of the Managing Committee ....
whether or not such trade, commerce, manufacture, execution of works contract, adventure or concern is carried on with the motive to make profit and whether or not any profit accrues from such trade, commerce, manufacture, execution of works contract, adventure or concern; and ... 13. ... It is clear from the above definition that the question of any profit-motive or accrual of any profit is not relevant. ... In conducting the clubhouse the preparat....
The first statute of H.N.B. Garhwal University, 1978 is applicable. Chapter 21 of the First Statutes relates to qualification and conditions of service of non-teaching staff of an affiliated college. ... The Committee of Management is comprised of persons elected by the general body of the society from amongst its members. The Committee is governed by the Societys rules and regulations. The Institution in which the petitioner is working as a Junior Engineer is affiliated to H.N.B. ... ....
motive. ... continued or contemplated to be continued with a profit-motive and not for sport or pleasure, (State of Andhra Pradesh v. ... It is further submitted that the respondent-University has no profit motive and has not derived any profit. The contention of the State that the printing and sale of prospectus resulted in profit to the University is without any basis. ... (3) In respect of the transfer of the right to use feature films, the perso....
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As stated earlier, after 29.07.2021 a Delegate is not entitled to represent a Primary Milk Cooperative Society in the General Body of Central Milk Producers Cooperative Society and this right is available only to the person who is elected as Chairman of the Primary Milk Cooperative Society. ... Petitioner contends that before amendment in the Rules, Delegate sent by different Primary Milk Cooperative Societies constituted General Body of the Central Milk Producers Cooperative Society; as he is elected a....
It follows from this that person would continue to be the f irst among equals only if he enjoys the confidence of the majority of the body of individuals. This person who is elected by the other members of the elected body to head their Body would by himself possess no superior right of the other members of the Body and he would be merely the first among the equals.
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In a petition under section 9 of the Arbitration and Conciliation Act, 1996, a Learned Single Judge of this Court granted an ad interim injunction restraining the respondent therefrom entering into an agreement or arrangement with any third party without first complying with his obligations under clause 31 (b) of the Agreement. The contract, however, contained a right of first refusal. A Division Bench of this Court, reversed the order of the Learned Single Judge and thereupon a Special Leave Petition was filed before the Supreme Court. In a petition under section 9 of the ....
It is claimed to be a non-profit motive establishment. It does not sell or distribute its product either in public or to outsiders except those selected by the Government of Andhra Pradesh under its programmes. The principal object is to provide and supply nutritious foods to school and pre-school children, pregnant women and lactating mothers and such other categories of beneficiaries as the Government from time to time decide within the general framework of the Government social welfare programmes. In April, 1982 a question arose regarding demand of payment of bonus under....
We fail to appreciate how the authority inviting tender can be compelled to accept the offer and permit plaintiff to work. In case after inviting offers from intending person, such offer is not accepted, person suffer ing may be entitled to a damages. 4. Execution of work with profit motive is a contract.
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